Executive Briefings

Hughes Communications Tells How to Manage Supplier Risk

By: CFO 04.20.2012

At Hughes Communications, managing risk means developing proactive resiliency. Building a satellite requires coordination between both internal efforts - where engineers design the satellite, aligning the beam patterns with the geography that needs to be covered - and external partners, which provide parts from around the world.

The company's engineers not only participate in choosing the main partners, but also may end up working at partner locations. "We've dropped engineers right into the process of the build," says Grant Barber, executive vice president and CFO. "That is done to reduce risk, and to make sure that we know the timing and capabilities of our offering." The company regularly monitors its partners' project milestones, a process that includes a series of pass/fail qualifications and reviews, not to mention cash payments based on performance.

While Hughes builds many of the components that are part of the ground infrastructure, it "does a very good job of having dual suppliers for most of our critical components," Barber says. The primary contractors that build the satellites have double and even triple redundancies for key parts.

The company's engineers not only participate in choosing the main partners, but also may end up working at partner locations. "We've dropped engineers right into the process of the build," says Grant Barber, executive vice president and CFO. "That is done to reduce risk, and to make sure that we know the timing and capabilities of our offering." The company regularly monitors its partners' project milestones, a process that includes a series of pass/fail qualifications and reviews, not to mention cash payments based on performance.

While Hughes builds many of the components that are part of the ground infrastructure, it "does a very good job of having dual suppliers for most of our critical components," Barber says. The primary contractors that build the satellites have double and even triple redundancies for key parts.